Most adults who were alive during the 1980s and 1990s saw a period of economic expansion and financial prosperity that may possibly be the largest of its kind in human history. Sadly, most Christian investors took no part in the gains and growth that the period produced. This is not just sad, however: it is intriguing. In this article, I want to explore why that is the case, and what attitude a Christian individual or investor ought to have towards his financial planning.
Several brilliant individuals have written about economics, investing, proper planning, etc. from a Christian perspective. There are some good materials available and resources one could use to implement a well thought out financial plan. Indeed, this is not just an option available to a true Christian it is a duty. "A godly man leaves an inheritance to his children, and their children," Proverbs tell us. "Whoever does not provide for his own family is worse than an infidel," the Apostle Paul tells us. Lack of financial planning and sound investing is perhaps one of the most distressing matters facing the Christian church, and particularly the Reformed church. Those of us who hold to Chalcedon's creed have an even greater responsibility to plan properly with our finances, invest intelligently, and leave behind the greatest legacy we possibly can. We not only strive to build up "spiritual capital" in our families (meaning generations of character, honor, and obedience) to have the cultural impact we desire to have; we must emphasize "financial capital" as well, in order to produce future generations of well-equipped families, schools, businesses, etc. all united to glorify the Lord and expand His kingdom on earth.
The large majority of Christians I have met throughout my life have not been successful in this endeavor especially in the Reformed circles I have grown up in. I firmly believe that this is largely due to a "head in the ground" mentality that has ignored the equity markets, prioritized survivalist nonsense over intelligent investing, and replaced rational concerns about certain economic fears with irrational concerns about the future of our nation and economy.
Let me preface my next comments with this statement: We worship an awesome God, and He is certainly free in His own covenantal love and wisdom to do with our nation as He wills. However, if God wanted to destroy the American culture for its disobedience by causing a collapse of our banking system, or through any type of "sky is falling" scenario, I do not believe that our biggest concern should be whether or not we have gold coins in our sock drawers, as opposed to stock holdings in our portfolios. God is an awesome God, and He will deal with His people as He sees fit. Our responsibility, in the meantime, is to be "wise as serpents, and gentle as doves," as the Messiah taught. It is not to tout the "nightmare of the month" every time we feel that an economic collapse is coming, render irrational panic in the hearts and minds of Christian investors, and keep our churches' and Christian families' capital forever on the sidelines. The pastors and authors who are guilty of this have done so to the detriment of many people and many churches. I do not want to depress those of you who have held savings bonds or gold/silver positions for the last twenty years, instead of participating actively in the American stock market, by showing a comparison of investment performance. The results would be unbelievable to you, and would probably only force you to commit various violations of the 10th commandment. I do, however, hope and pray that our next generation will not make the same mistakes.
Ways to Invest
It is my opinion that active participation in the equity markets through dollar-cost averaging is the greatest means of obtaining wealth available to an investor. Running one's own business with success can be a greater means (as can finding success as a professional actor or athlete). But for those in a bit more realistic place in life, an intelligent, safe, diversified, proper participation in the equity markets can be the greatest wealth-building habit in the history of America, especially in the twenty-first century. It is important for me to say that capitalism is not one of the economic systems that could work in a Christian society. It is the only system. When we read the Biblical teachings on economics, understand the role of man and the role of the state in a free society, and examine the entire scriptural context regarding markets, productivity, and wealth creation, we are left only with capitalism. Smart equity investments are a beautiful way for those who cannot afford to or are not skilled in entrepreneurial matters to play a part in the growth that capitalism brings to an economy. Indeed, certain international economies are now embracing capitalism in a way they never have in history. It is my contention that tremendous investing opportunities exist there as well.
There are those who are afraid of a complete banking collapse, as we rely on a centralized fractional reserve to run a banking system. I am opposed to the concept of the Fed, and personally take an Austrian approach to money and economics. However, I do not subscribe to the idea that the Fed will collapse, the banking system will completely fail, and that we will all be left lined up in the streets to find out how to spend our earned dollars. Indeed, if someone does feel that all of those things will happen, he ought to consider what possible investment, if any, is a safe place to put his money. Those concerns and phobias need to be balanced with our expectations for life. I am not a survivalist, and I refuse to allow my family's investment strategy to be redefined every time a new "nightmare theory" comes along. We in the Reconstructionist camp are very critical of Dispensationalists for their "antichrist of the month" books and mentality. I suggest to you that we have been much worse in some of our own doomsday prophecies (read: failed predictions) here in the Reformed camp.
My own belief about the Fed and its monetary policy (indeed, even its own existence) is that it is immoral, and normally inflation producing. I do not see the greatest concern about centralized banking as an all-out collapse, but at the very least, a mostly damaging effect on the value of money. The irony I find in all of this is that the best historical means of combating inflation has been the very investment strategy so often repudiated in Christian publications active investments in the equity markets. If we believe that inflation is wrong (both morally and economically), we do not "throw the baby out with the bath water" by ignoring the equity markets altogether. The responsibility we have is to take an intelligent approach, a careful design, and to follow a diligent process. This can be done, despite what you may have heard otherwise.
I encourage you to re-think your approach to your family's finances and to line up your objectives with the most discerning, intelligent, and wise strategy that you are able to.
- David L. Bahnsen